Summary
Union Bankshares Corp. is underperforming direct competitors and industry peers, but I still recommend it as a buy.
The company has a laser-focused strategy for cornering the Virginia regional banking market and has proven successful in its attempt.
The company's leadership is also littered with well connected individuals in the Virginia market.
Because I understand the value of Virginia's banking market and realize the importance of the networks the leadership of Union have in the state I've been accumulating shares over the course of more than a year.
Abstract
Union Bankshares Corp. (UBSH), a Richmond, Virginia-based bank holding company, falls short of peers and other industry players on valuation and performance metrics, but thanks to the laser-focused commitment to the Virginia market and the networking benefits of its key personnel, UBSH has the opportunity to corner one of the most dynamic and fast-growing economic markets in the United States.
Industry Comparison
Union Bankshares currently lags the industry on most valuation and performance metrics. 3Q18 reported ROA and ROE were 1.05x and 8.03x respectively, which is below the industry benchmark of 1.00x for ROA and 10.00x for ROE. Their ROA and ROE were also below the average of their direct peers in the small-cap banking sector which was 1.22x for ROA and 9.62x ROE for reported 3Q18 (the averages for their peers were calculated using a select sample of small-cap banks and not the entire space). Ultimately, UBSH performed worse than the industry average of 1.11x ROA and 9.87x ROE (the industry average was calculated using a select sample of small, medium, and large-cap banks). UBSH also fell short on other metrics as well:
